FINAL REPORT

COURSE: FINANCIAL ACCOUNTING

BBA-3A

PRESENTED TO: SIR GHULAM SUBHANI

GROUP MEMEBERS:

MUHAMMAD ZAIGHAM KHAN (2011316)

SHIZA BINTE LIAQUAT NOON (2011296)

ALIZAH MASOOD (2011281)

MAHEEN FATIMA (1911155)

LIBRA ZAFAR (2011302)

 TABLE OF CONTENT

Contents
HUG A MUG CAFÉ...............................................................................................3
Aim of the project:...................................................................................................6
Describe the organization structure of your business:.....................................6
Business Financing and The Reasoning for Choice of Financing:...................8
Key Reason for starting this particular business:.............................................8
Key Features/difference in comparison with the competitors:........................8
FIRST CYCLE........................................................................................................9
SECOND CYCLE.................................................................................................18
THIRD CYCLE.....................................................................................................28
OVERALL EXECUTIVE SUMMARY:.............................................................38
 HUG A MUG CAFÉ

“WE’RE JUST BREWING IT ALL UP”

WHY DID WE CHOOSE THIS SPECIFIC BUSINESS?

Around 150 million people drink coffee every day, for them coffee is a daily requirement, in
Pakistan there is now a consensus that coffee is more than just a drink: It's a culture, an art, and a
passion.
In order to adapt with the growing culture of Pakistan we came out with our own coffee shop called
Hug a Mug.
WHAT MAKES US SO SPECIAL?
With the dynamic and competitive environment, we knew we had to be innovative and make extra
effort in order to be successful, so we launched our app hug a Mug, now you must be thinking what's
so impressive about that? Well our App allows you to create your own custom coffee, from a variety
of milks and syrups to different types of sugars and coffees. We have it all, you can simply make
your own coffee and name it whatever you want. So the next time you say you want a Latte mixed
with Oat milk and hot Choco, you don't need to stand in line and take a long time explaining what
you want.
You can simply make custom coffee on our app and save it, our barista knows exactly what to do.
Secondly, you can also pre order your coffee to go, just to save yourself those extra minutes in the
morning. 
Thirdly we understand how not everything is suited for everyone, hence we want a business where
everyone can find something of their liking and suiting hence we have a range of milks (Oat,
Almond, Lactose free, dairy free, fat free etc..) and just like this we also have a range of syrups,
coffee beans, sugar, and even snacks.
Fourthly our business is eco-friendly so the name “Hug a Mug” was carefully chosen because
approximately 2,700,000 coffee cups are thrown out every day. We wanted to do our part in trying to
keep a clean and green environment hence we have introduced biodegradable cups on the go, which
are safe for the environment and we also have cup merchandise, which means you can buy our
reusable travel mugs and use them whenever you like, and if you bring our cups to our coffee shop
then you will get a 5% discount. 
Also, our business greatly believes in returning back to the community hence for every cup of coffee
purchased a small amount of money is sent to charity with the main aim of “A cup of coffee for a
plate of food” hence every single coffee contributes towards a proper meal for those in need.
We aimed towards being as environmentally friendly as possible hence our coffee ground
composites are sold for free to nursery and gardeners so they can also be used and decomposed
properly rather than flushing them down the drain. 
We believe every business should focus on the triple bottom line,  which means companies should
commit to focusing as much on social and environmental concerns as they do on profits, and so for
this specific reasoning we have introduced biodegradable cups as well as Plantable cups which
means these cups have plant able seeds in them which once used can be planted in soil, this way
every cup of coffee sold will be equal to one tree being planted, the coffee cups will have our brand
initials in it and the specifications of the seed (seed and seedling biography) which will help people
understand the type of environment needed for the seed to grow.
Executive summary:

Hug a mug cafe started planning around January 2019, the research planning and eco-friendly
nature required a lot of detailed research and market information, the business started around.

This cafe is located in Bahria Town Rawalpindi and also has an app that can help in providing a
door-to-door delivery and gives pickup option as well, this business is aimed towards people
who enjoy having a good fresh coffee, shakes, chillers or even snacks while knowing they are
not harming the environment around them and that a percentage of every money spent at this
place is aimed towards the betterment of their society and environment. This app helps different
charities and is also recognized by the government of Pakistan in “Making Pakistan Green
Again” and in the project of “No One Sleeps Hungry at Night” which is “Koye Bhooka Nahi
Soye Ga”.

Aim of the project:

The aim of this project is to gain profitability and add market share with the idea of keeping the
environment clean and green while saving energy and stopping global warming, the basic idea
behind it is to save the earth by being aware of our surroundings and maintaining our
contribution towards it.

Describe the organization structure of your business:

CEO

FINANCIAL MARKETING HR TECHNICAL

MANAGER MANAGER MANAGER MANAGER

CEO: Aliza Masood

Our CEO plays a very important role in the business because she is the head of our team, she
takes all the decisions for our organization, she is also quite aware of the profit and the loss our
company acquires, she gives the final decision and decides all internal and external situations
revolving around how our business should be conducted.

CEO arranges meetings and encourages innovative idea, manages conflicts, and analyzes the
performance of each employee closely, she keeps an eye on the workings of every department
and make sure that every manager is maintaining every employee to their full potential.

Financial Manager: Shiza Noon

Financial manager records all the cash flown in and out of the business he also keeps a check in
balance on deliveries of the plant the delivery price and the cash payments and keeps up to date
with the records of profit and loss statements so he can analyze and predict the future of her
business.

Marketing Manager: Muhammad Zaigham khan

Our marketing manager uses different tools in apps to create innovative advertisement for our
business our main targeted advertisement areas are Facebook, Instagram, Twitter, YouTube, and
news channels.

Our marketing manager makes sure people know about our business and our eco-friendly nature
towards the society and the advantages and the benefits we offer with this.

HR Manager: Libra Zafar

HR manager takes interviews and caters recruitment and selection of potential employees
towards our business, she also makes sure there is team spirit by combining different people
towards groups and assigning them tasks, if there is any conflict within a group or age or
Manager helps resolving such problems. She is also responsible for appraisal and complaints of
our staff.

Technical Manager: Maheen Fatima

Our technical manager handles all the hardware and software applications especially the app
used in our business, she keeps it updated and tries bringing innovation and changes in app, if
necessary, she also makes sure that there is no security or copyright issues while making decision
related to the quality and the running of hardware and software updates. The focus of our
manager here is to focus on computer intelligence implementation and to give a clear image of
how many people are using our app, people downloading our app and visiting the app.

Business Financing and The Reasoning for Choice of Financing:

For the financing of our business, we choose debt financing. As it is shown in the first cycle that
we acquired a bank loan of RS. 20,00,000. After which we took another loan of RS. 500,000 in
the next cycle. Because a loan does not provide an ownership stake and so it does not
cause dilution to the owners’ equity position in the business. Debt financing as compared to
equity financing can be a less expensive source of growth capital if the Company is growing at a
high rate. That’s why we opt towards debt financing for the growth of our business.

Key Reason for starting this particular business:

The key reason for starting this specific business was that our CEO had an aim of innovating
food business in Pakistan with digitalization and contribute for the betterment of our
environment keeping in view the condition of climate change in our company. For achieving the
aim, we designed an app by which our customers can place an order of customized coffees
before even reaching our café. Also, we designed biodegradable as well as plantable cups which
would help in the environment’s betterment.

Key Features/difference in comparison with the competitors:

We believe that we have international standard setups interns of snacks, coffee and beverages
that can outshine us in respect to our competitors we also believe that we maintain a ranking in
one of the few businesses that not only want to expand towards market share and growth but also
contribute towards environment safety and ecofriendly nature we are planning on going solar in
the upcoming years to reduce our electric wastage as well, having said that we as a business also
believe that we cater the needs of many different individuals with different health concerns
example lactose intolerant or even diabetic patients as compared to our competitors who rely on
serving merely plain coffee we offer a variety of different types of milks and flavor syrups for
diabetic care as well. We believe coffee is not just a drink it is an art that should be explored.

FIRST CYCLE

JOURNAL ENTRIES
HUG A MUG CAFE
JANUARY 2022
DATE ITEM DEBIT CREDIT

Jan 1 Cash 2,000,000

Bank loan 2,000,000

Jan 5 Rent lease 100,000

Cash 100,000

Jan 7 Furniture 500,000

Cash 500,000

Jan 8 Inventory 200,000

Cash 200,000
Jan 10 Equipment 500,000
Cash 500,000

Jan 20 App Development 150,000

Cash 150,000

Jan 21 App Patent 50,000

Cash 50,000

Jan 22 POS System 12,000

Cash 12,000

Jan 24 Advertisement 35,000

Cash 35,000

Jan 26 Salary Payable 90,000

90,000
Cash
Jan 27 20,000
Cash 20,000
Beverage Sale
Jan 28 15,000
Cash 15,000
Snack Sale
Jan 29 300,000
Rent 300,000
Cash
Jan 29 150,000
Utilities 150,000
Cash
Jan 30 5000
Cash 5000
Gift Card Sale

T- ACCOUNTS

CASH
Dr Cr
Jan 1 2,000,000 Jan 5 100000
Jan 27 20,000 Jan 7 500000
Jan 28 15,000 Jan 8 200000
Jan 30 5000 Jan 10 500000
Balance=2040,000 Jan 20 150,000
Jan 21 50,000
Jan 22 12,000
Jan 24 35,000
Jan 26 90,000
Jan 29 300000
Jan 29 150,000
=2087,000
Credit balance=47,000

BANK LOAN
Dr
Cr
Jan 1 2000000
Balance=2000000

RENT LEASE
Dr
Cr
Jan 5 100000
Balance=100000
BEVERAGE SALE EQUIPMENT

Dr Cr
Jan 27 20,000
Balance=20,000
Dr Cr
Jan 10 500000
Balance=500000

FURNITURE

Dr
Cr
Jan 7 500000
Balance=500000

SALARY EXPENSE
Dr Cr
Jan 29 90,000
Balance=90,000
 UTILITIES
Dr Cr
Jan 29 150,000
Balance=150,000
APP DEVELOPMENT
Dr Cr
Jan 20 150,000
Balance=150,000

RENT
Dr Cr
Jan 29 300000
Balance=300000
APP APTENT
Dr
Cr
Jan 24 50,000
Balance=50,000

GIFT CARD SALE

Dr Cr
Jan 30 5000
Balance=5000

INVENTORY SNACK SALE

Dr
Cr
 Dr Cr
Jan 8 200000 Jan 28 15,000
Balance=200000 Balance=15,000

POS SYSTEM ADVERTISMENT

Dr Cr Dr
Cr
Jan 22 12,000 Jan 24 35,000

Balance=12,000 Balance=35,000

TRIAL BALANCE
HUG A MUG CAFÉ
JANUARY 2022
DEBIT CREDIT

Cash 47,000

Rent lease 100000

Furniture 500000

Inventory 500000

Equipment 200000
App Development 150,000

App patent 50,000

Utilities 150,000

Salary Expense 90,000

Rent 300000

Beverage Sale 20,000

Gift Cards Sale 5000

Snack Sales 15,000

Bank loan 2,000,000

TOTAL 2087,000 2,087,000

PROFIT AND LOSS A/C

HUG A MUG CAFÉ
FOR THE YEAR ENDED 1-31ST JAN 2022
DEBIT CREDIT

PARTICULAR AMOUNT PARTICULAR AMOUNT

Gross loss 100,000 Beverage Sale 20,000

Rent lease 100,000 Snack Sale 15,000
Equipment 200,000 Gift Card Sale 5000
Inventory 500,000
App Development 150,000
App Patent 50,000
POS System 12,000
Advertisement 35,000
Salary 90,000
Utilities 150,000
Rent 300,000
NET LOSS 164,7000

CASH FLOW STATEMENT

HUG A MUG CAFÉ
MONTH ENDED JANUARY 31ST 2022

Net loss (1647000)

SUBTRACTIONS FROM CASH

Inventory (500,000)

Advertisement (35,000)

Rent (300,000)

Rent lease (100,000)

Utilities (150,000)

Salary (90,000)
 NET CASH FLOW FROM OPERATION

Beverage Sale 20,000

Gift Card Sale 5000

Snack Sale 15000

CASH FLOW FROM INVESTING

Equipment (200,000)

App Development (150,000)

App Patent (50,000)

POS system (12000)

CASH FLOW FROM FINANCING

Bank Loan 2,000,000

Cash flow for the month ended (1194000)

BALANCE SHEET
HUG A MUG CAFÉ
JANUARY 31ST 2022

Current Assets Short Term Liabilities:

Cash (47,000)
Furniture 500,000
Inventory 500,000
Equipment 200,000 Long Term Liabilities:

App Development 150,000

Bank Loan 2,000,000
App Patent 50,000
POS System 12,000
Long Term Assets: Total Liabilities 2,000,000

Owner’s Equity:
Net Loss (635,000)

Total Assets = 1,365,000 Total Liabilities +O. E 1,365,000

SECOND CYCLE
JOURNAL ENTRIES
HUG A MUG CAFE
FEB 2022

DATE ITEMS DEBIT CREDIT

Feb 1 Cash 500,000
Bank Loan 500,000

Feb 3 Cash 60,000

Snack Sale 60,000

Feb 5 Cash 90,000

Beverage Sale 90,000

Feb 8 Utilities 140,000

140,000
Cash

Feb 11 300,000
Rent
300,000
Cash

Feb 13 50,000
Coffee Merchandise
50,000
Account Payable

Feb 16 20,000
Advertisement
20,000
Cash

Feb 17 70,000
Coffee Machine
70,000
Cash

Feb 19 90,000
Salaries 90,000
 Cash
Feb 20 10,000
App Maintenance 10,000
Cash
Feb 21 25,000
Cash 25,000

Gift Card Sale

Feb 22 40,000

Cash 40,000

Merchandise Sale
Feb 25 75,000
75,000
Cash
Beverage Sale
Feb 26 55,000
55,000
Cash
Snack Sale
Feb 27 100,000
100,000
Loan Installment
Cash
Feb 29 40,000
40,000
Security Cameras
Account Payable

T - ACCOUNTS
 CASH
Dr Cr
Feb 1 500,000 Feb 8 140,000
Feb 3 60,000 Feb 11 300,000
Feb 5 90,000 Feb 16 20,000
Feb 21 25,000 Feb 17 70,000
Feb 22 40,000 Feb 19 90,000
Feb 25 75,000 Feb 20 10,000
Feb 27 55,000
Balance =215,000

BEVERAGE SALE
Dr Cr
Feb 5 90,000
Feb 22 75,000
Balance=165,000

COFFEE MACHINE
 Dr Cr
Feb 13 70,000
Balance=70,000

GIFT CARD SALE

Dr Cr
Feb 21 25,000
Balance=25,000

SECURITY CAMERAS
Dr Cr
FEB 29 40,000
Balance=40,000

UTILITIES
Dr Cr
Feb 8 140,000
Balance=140,000
 SALARY
Dr Cr
Feb 19 90,000
Balance=90,000

SNACK SALE ADVERTISMENT

Dr Cr
Dr Cr
Feb 3 60,000
Feb 16 20,000
Feb 25 55,000
Balance=20,000
Balance=115,000

RENT

Dr Cr
Feb 11 300,000
Balance=300,000
 ACCOUNT PAYABLE
Dr Cr
Feb 13 50,000
Feb 29 40,000
Balance=90,000

COFFEE MERCHANDISE

Dr Cr
Feb 22 40,000

APP MAINTANCE
Dr Cr
Feb 20 10,000
Balance=10,000
 HUG A MUG CAFÉ
TRIAL BALANCE SHEET
FEB 2022
DEBIT CREDIT
Cash 215,000
Bank Loan 500,000
Snack Sale 115,000
Beverage Sale 165,000
Utilities 140,000

Rent 300,000

Coffee Merchandise 10,000

Account Payable 90,000

Advertisement 20,000

Salaries 90,000

Coffee Machine 70,000

App Maintenance 10,000

25,000
Gift Card
40,000
Security Cameras

935,000
935,000
TOTAL
 PROFIT AND LOSS A/C
HUG A MUG CAFÉ
FOR THE YEAR ENDED 1-29 FEB 2022
DEBIT CREDIT

PARTICULARS AMOUNT PARTICULAR AMOUNT

Gross loss 150,000 Snack sale 115,000

Utilities 140,000 Beverage Sale 165,000
Rent 300,000 Coffee Merchandise Sale 10,000
Advertisement 20,000 Gift Card Sale 25,000
Salaries 90,000
Coffee Machine 70,000
Security Cameras 40,000
App Maintenance 10,000
Coffee Merchandise 50,000
NET LOSS 545,000
 CASH FLOW STATEMENT
HUG A MUG CAFÉ
MONTH ENDED FEBURARY 29th 2022

Net loss (625000)

ADDITION IN CASH

Account Payable 90,000

SUBTRACTIONS FROM CASH

Advertisement (20,000)

Rent (300,000)

Utilities (140,000)

Salaries (90,000)

App Maintance (10,000)

NET CASH FLOW FROM OPERATION

Beverage Sale 165,000

Gift Card Sale 25000

Snack Sale 115000

Merchandise Sale 40,000

CASH FLOW FROM INVESTING

Coffee Machine (70,000)

Security Cameras (40,000)

CASH FLOW FROM FINANCING

Bank Loan 500,000

Cash flow for the month ended (410,000)

 BALANCE SHEET

HUG A MUG CAFÉ

FEBURARY 2022
ASSETS LIABILITIES AND OWNER EQUITY

Assets RS Liabilities RS

Cash 215,000 Account payable 90,000

Coffee Machine 70,000 Bank Loan 500,000

Cameras 40,000

Coffee merchandise 50,000

Owner Equity

Net Loss (215,000)

Total Assets: 375,000 Total liabilities + O.E 375,000
 THIRD CYCLE
JOURNAL ENTRIES
HUG A MUG CAFE
MARCH 2022
DATE ITEMS DEBIT CREDIT

Mar 2 Cash 80,000

Snack Sale 80,000

Mar 3 Cash 110,000

Beverage Sale 110,000

Mar 5 Utilities 150,000

Cash 150,000

Mar 6 Rent 300,000

300,000
Cash

Mar 9 25,000
Advertisement
25,000
Cash

Mar 10 90,000
Salaries
90,000
Cash

Mar 12 40,000
Cash
40,000
Gift Card Sale

Mar 15 75,000
Cash
75,000
Café Merchandise Sale

Mar 16 150,000
Inventory 150,000
 Account Payable
Mar 19 100,000
Loan Installment 100,000
Cash
Mar 21 200,000
Delivery vehicles 200,000

Notes Payable
Mar 24 120,000

Cash 120,000

Snack Sale
Mar 26 160,000
160,000
Cash
Beverage Sale
Mar 29 10,000
10,000
Coffee Machine Maintenance
Cash
50,000
Mar 31 50,000
Cash
Gift Card Sale

T- ACCOUNTS
 CASH

Dr Cr

March 2 80,000 March 5 150,000

March 3 110,000 March 6 300,000

March 12 40,000 March 9 25,000

March 15 75,000 March 10 90,000

March 24 20,000 March 19 100,000

March 26 160,000 March 29 10,000

March 31 50,000 Balance=40,000

COFFEE MACHINE MAINTENANCE

Dr Cr
March 29 10,000
Balance=10,000
 Dr Cr BEVERAGE SALE
March 3 100,000 ADVERTISEMENT
Dr Cr
March 26 160,000 March 9 25,000
Balance=270,000 Balance=25,000

SNACK SALE GIFT CARD SALE

Dr Cr
Dr Cr
March 2 80,000
March 12 40,000
March 24 100,000
March 31 50,000
Balance=180,000
Balance=90,000

UTILITIES RENT
Dr Cr Dr Cr

March 5 150,000 March 6 300,000

Balance=150,000 Balance=300,000

SALARIES CAFÉ MERCHANDICE SALE

 Dr Cr
Dr Cr
March 15 75,000
March 10 90,000
Balance=75,000
Balance=90,000

LOAN INSTALLMENTS INVENTORY

Dr Dr
Cr Cr
March 19 100,000 March 16 150,000

Balance=100,000 Balance=150,000

ACCOUNT PAYABLE DELIVERY VEHICLES

Dr Cr Dr
March 16 150,000 Cr
March 21 200,000
Balance=150,000 Balance=200,000

NOTES PAYABLE
Dr Cr
March 21 200,000
Balance=200,000
 TRIAL BALANCE
HUG A MUG CAFE
MARCH 2022
DEBIT CREDIT

Cash 40,000

Beverage Sale 270,000

Snack Sale 180,000

Café Merchandise Sale 75,000

Account Payable 150,000

Notes Payable 200,000

Gift Card Sale 90,000

25,000
Advertisement

Coffee Machine
10,000
Maintenance

150,000
Utilities
Salaries 90,000

Loan Installments 100,000

Inventory 150,000

Delivery Vehicles 200,000

Rent 300,000

1025000
TOTAL 1025000

PROFIT AND LOSS A/C

HUG A MUG CAFÉ
FOR THE MONTH ENDED 1-31ST MARCH 2022

DEBIT CREDIT

PARTICULAR AMOUNT PARTICULAR AMOUNT

Gross loss 50,000 Snack sales 180,000
Utilities 140,000 Beverage Sale 270,000
Rent 300,000 Merchandise Sale 75,000
Advertisement 25,000 Gift Card Sale 90,000
Coffee Machine 10,000
Maintenance
Loan installments 100,000

Salaries 90,000
NET LOSS 100,000

CASH FLOW STATEMENT

HUG A MUG CAFÉ
MONTH ENDED MARCH 31ST 2022

Net loss (100,000)

ADDITION IN CASH

Account Payable 150,000

SUBTRACTIONS FROM CASH

Advertisement (25,000)

Rent (300,000)

Utilities (150,000)

Salary (90,000)

NET CASH FLOW FROM OPERATION

Beverage Sale 270,000

Gift Card Sale 90000

Snack Sale 180000

CASH FLOW FROM INVESTING

Delivery Vehicle (200,000)

CASH FLOW FROM FINANCING

Bank Loan 2,000,000

Loan Installment 100,000

Cash flow for the month ended 1925000

BALANCE SHEET
HUG A MUG CAFÉ
MARCH 2022
ASSETS LIABILITIES + OWNER’S EQUITY
RS RS
Assets Liabilities

Cash 40,000 Accounts Payable 150,000

Inventory 150,000 Notes Payable 200,000
Delivery Vehicle 200,000 Loan Installments 100,000

Total Liabilities 450,000

Owner’s Equity

Net Loss (60,000)

Total Assets 390,000 Total Liabilities +O. E 390,000

OVERALL EXECUTIVE SUMMARY:
The overall executive summary of all three-month cycles are as follows,

1st Cycle:
In the first cycle we started our business with a bank loan of RS. 20,00,000 and bought all the
necessary things required to run the business smoothly. In our first month we suffered from a
loss of RS. 16,47,000 because it was the stage in which we invested and established our business.

2nd Cycle:
In the 2nd month our business we took another loan of RS. 500,000 to meet the expenses of our
business. We experienced growth in our business as our sales almost doubled as compared to our
last month. In the end of this month, we suffered from a net loss of RS. 545,000 which was less
than the last month.

3rd Cycle:
In the third month our business was stable enough to run on its own as we didn’t a loan anymore.
In the third month our sale was all time high and attracted many new customers. In the end of
this month, we only suffered from net loss of RS. 100,000. As our net loss decreased massively,
we hope for break even or profit by next month.